Reasoned Opinions In An Unreasoned Time

Taxation

Beto O’Rourke is running against Ted Cruz for United States Senator from Texas. Beto is not good for Texas or for the United States as a whole. He has recently shown that he, just like many Democrats, does not understand basic economics, is a hypocrite, and does not put the concerns of his prospective constituents first.

Full disclosure; I voted for Senator Cruz in 2012 and would very happily do it again if I still lived in Texas.

Economics

Something that really bothers me is when elected officials, or candidates, make statements on policy using the party line talking points. Usually, these talking points are beret of facts, context, or both. In an interview with a Houston based NBC affiliate, KPRC, Rep. O’Rourke made the following statement. It is astonishing how far removed from reality this statement is, especially when put into context.

First, tax cuts do not “cost” money. Tax cuts have a dollar amount attached to them to show the scope of the cuts; single payer healthcare has an actual “cost” because it increases spending. As stated in the previously linked article:

Taxes are revenue for the government collected involuntarily from its citizens. Therefore, a cut in taxes simply means less non-consensual money is taken from taxpayers. It is not money changing hands from the government to citizens. Indeed, it is money not changing hands. A tax cut is lowering the rate of taxation…

It is likely that he knows talking about the “cost” is misleading. He is betting that the majority of people watching his interview do not fully understand economics and taxation. I do not fully understand them either, but I know he is being dishonest. His talk about the cost flows right into his second misleading statement.

Rep. O’Rourke says that the tax cuts will disproportionately flow to the wealthiest in the country. He is right, because that is how tax cuts work. Consider the following information from the Tax Foundation regarding 2015 tax information, source:

The top 1 percent paid a greater share of individual income taxes (39.0 percent) than the bottom 90 percent combined (29.4 percent).

The top 1 percent of taxpayers paid a 27.1 percent individual income tax rate, which is more than seven times higher than taxpayers in the bottom 50 percent (3.6 percent).

In 2015, the top 50 percent of all taxpayers paid 97.2 percent of all individual income taxes while the bottom 50 percent paid the remaining 2.8 percent.

The top 25% of income earners, those earning above $79,655, paid 86.6, or $1.25 trillion of the total income taxes collected. *

The second 25% paid $153 billion in total income taxes. The bottom 50% paid only $41 billion in total taxes. *

*Data is in table 1

While O’Rourke is correct in his statement that the wealthy will get the most benefit from the tax cuts, it is highly misleading to stop there. The press eviscerated Mitt Romney during the 2012 election cycle when he claimed that “47% of Americans pay no income tax.” As rated here, his statement was true. For O’Rourke to make the claim that the wealthy will disproportionately benefit from the tax cut completely ignores the reality of federal taxation. A person can only benefit from a tax cut when they pay taxes. Additionally, we have progressive taxes, which makes it completely uncontroversial that wealthy Americans will get a comparatively larger tax cut than someone making significantly less money, because they pay significantly more in taxes.

He briefly mentions income inequality as if the rich stole from the poor to get their wealth and create the inequality. Like the previous statements, this is only relevant if you are trying to mislead your supporters and guide them down a path of victim mentality. Jeff Bezos, the wealthiest person on earth, did not achieve his wealth by stealing from others. He got it by creating one of the most powerful capitalistic forces the world has ever seen. Amazon is such a commercial powerhouse that the Chairman of the Fed credits Amazon with helping to keep inflation rates low. Bezos got his wealth by providing a service to tens of millions of Americans, by enabling tens (if not hundreds) of thousands of merchants to expand their online businesses, and by powering a majority of the websites and services we enjoy; for context, Netflix is an AWS customer, source.

I do not understand the vilification of the wealthy for political gain. The people arguing the wealthy are greedy for not wanting to be taxed heavily are the very people wanting to take more of someone else’s money. Taxation is not compassion, it is legalized theft and those that want more of people’s money are as greedy as the ones they chastise for not wanting more taxes.

O’Rourke continues to vilify corporate America by attempting to paint them as greedy thieves because they have made a lot of money and retained the savings. It is relevant to note that Apple, the first company valued at $1 trillion dollars, regularly increases their stock dividends, is buying back their stock at a record pace (which helps the investor), and continues to be technological paradigm shifter. They also have $243.7 billion cash on hand. His criticisms are stupid for the same reasons as in the above paragraph.

Rep. O’Rourke then latches on to the inhumanity of giving tax cuts instead of giving raises to teachers. Good teachers are not paid enough for their time, commitment, and the importance of their work. Regardless of personal beliefs on the public school system, it is the current system in place and the most widely utilized educational system. Teachers compensation should not be a partisan talking point. It should be something that a consensus form easily about. Rep. O’Rourke may have forgotten that all spending bills originate in the House; according to GovTrack he has not proposed or sponsored any legislation on teacher pay, unless there are provisions I am unaware of in the legislation sponsored or proposed by him. Furthermore, as he bemoans the tax cuts on behalf of teachers, he is forgetting that the tax cuts are, in essence, a pay raise for these teachers. If elected though, he would likely vote to repeal the tax cuts; effectively cutting the paycheck of millions of Americans, including the teachers he feigns concern for.

His criticism of the tax cuts, and corporate America, is a red herring designed to sow divisions between the wealthy and the not so wealthy.

Beto, The Hypocrite

As noted in the above video, O’Rourke thinks that budget deficits are bad.

Actually, that is not totally true. O’Rourke believes that a single payer healthcare system is the future of healthcare in America, source. In one breath he bemoans the $800 billion deficit this year, and in another talks about racking up roughly $30 trillion in additional federal spending for a single payer system. A Medicare for All system would take that $800 billion deficit and and triple it, if not more. I wrote a post on Medicare for All, here, and there is a great article here that talks about the difficulties and cost of transitioning to a single payer system. It seems that O’Rourke likes deficits, massive government, and gargantuan tax increases if they enable leftist policy. Below is a graphic documenting the necessary tax increases to fund the single payer system he have shown support for.

Beto (maybe) Put “Dreamers” First

Rep. O’Rourke talked about how the Houston area, devastated by Hurricane Harvey one year ago, is still in need of help to recover from the record devastation. He, and Cruz, have voted yes on measures to secure something like $90 billion in funds to help with recovery in the area, which is very good.

Recently the Cruz campaign released an ad attacking O’Rourke for voting against a measure to secure various tax breaks for victims of Hurricane Harvey, and other storms. O’Rourke says that he voted no because the tax breaks were not generous enough to the victims of the 2017 hurricane season compared with breaks previously granted to storm victims. I do not know the accuracy of this claim, and I am also not an expert by any definition on the processes and procedures of the House of Representatives; but according to the record of actions for this bill, Rep. O’Rourke did nothing to improve the provisions of the bill while it was up for debate [If I am wrong please correct me]. Additionally, he initially voted against another disaster relief bill because he, among other democrats, wanted to attach provisions to DACA recipients, as noted below; source.

O’Rourke did support four other bills that provided disaster relief for Harvey victims, three of which became law.

O’Rourke voted “no” on an earlier version of one of the bills containing Harvey aid that was passed to avert a government shutdown. Many Democrats opposed that bill because it did not address the status of young immigrants facing deportation after President Donald Trump scrapped the Obama-era Deferred Action for Childhood Arrivals program.

Due to his inaction on proposing changes to the bill, and his previously DACA motivated “no” vote, its hard to say that he always puts his constituents best interests first. At the end of this Ted Cruz ad there are state (or local) officials praising Sen. Cruz for his tireless work for Texas’ recovery.